JEREMY GRANTHAM: We Are In A Race To Prevent The Collapse Of Civilization

Jeremy
Grantham, the well-known head of investment firm GMO, has
become increasingly vocal about his concerns for the fate of the
world.

"Our global economy, reckless in its use of all resources and
natural systems, shows many of the indicators of potential
failure that brought down so many civilizations before ours,"
writes Grantham in his new quarterly
letter titled "The Race Of Our Lives."

In 10 pages, he compiles some key points we've heard him discuss
at length in his recent media tour. He spends most of his
message on what makes him optimistic. We summarize is
letter here.

Civilizations Fall

Even the greatest civilizations like Rome eventually fell.
Citing research,
Grantham told Charlie Rose that civilizations have an average
lifespan of around 250.

He hammers on this topic at length in his letter.

"Probably the greatest agreement among scholars, though, is that
the failing civilizations suffered from growing hubris and
overconfidence: the belief that their capabilities after many
earlier tests would always rise to the occasion and that growing
signs of weakness could be ignored as pessimistic," he writes.

Economist Thomas Malthus warned us that the growing population
would eventually outpace the earth's ability to feed it.

"Malthus, however, completely missed declining fertility, a
potentially very long-term and hence much more critical factor to
the survival of our species," writes Grantham. "Neither he nor
anyone else before 1960 even dreamed that we would voluntarily
decide to have fewer children even as we became richer. In his
day and until the early twentieth century, rich families
routinely had eight or more children."

In nearly every major economy, fertility rates have been
falling. He includes five charts showing this, including
one that stood out.

GMO

Here's Grantham:

Exhibit 3 shows selected important and sometimes spectacularly
unexpected examples. At the top of the unexpected list is Iran,
which has dropped from a fertility rate of 7 – children per
woman! – in 1960 to an almost unbelievable 1.6 today. Another
remarkable example of a large Islamic country is Bangladesh,
which has also fallen from 7 in 1960 to 2.2. This is
extraordinary given their extreme poverty. The particularly
important India, with its 1.2 billion people, has fallen from 6
to 2.6. This is quite remarkable in absolute terms, but given the
previous two examples and given India’s pressure from
overpopulation, it’s almost a disappointment.

In addition to fertility rates falling, the world population
could see an inflection point. This is according to the
United Nations' scenario analysis.

GMO

"The lower population track... holds out a strong hope of
survival – that is, of maintaining a reasonably stable global
civilization and continuing to improve the quality of the average
life," writes Grantham. "The return, therefore, to helping
encourage a lower population everywhere is incredibly high."

"For once, all of the innovations, corporate start-ups, and risk
taking – the best part of the capitalist system – work to
decrease our use of depleting hydrocarbons and therefore to
increase our chance of stabilizing our civilization before the
cliff edge is reached," writes Grantham.

China

There's still a long way for renewable energy technologies to go.
And it'll take a lot of money to finance to the need research and
development.

Grantham believes a smart 25-year plan by China could have huge
implications. And China has the money and the incentive to
make big moves in renewable energy development.

"Such a massive broadbased program would potentially give them
global dominance in the most important industries of the future
and would relieve them of their greatest single worry: energy
security," writes Grantham. "It would also relieve them of
what will surely become their greatest societal irritant: the
incredible air pollution of their major cities, which must
already be reducing life expectancy in those cities by several
years, as well as substantially increasing health costs."

So...

"The bottom line is that if we put our minds to it we can
overcome normal inertia and abnormally powerful vested interests
that oppose necessary change," he writes. "Whether we can move
fast enough on these fronts and at the same time reduce the
output of greenhouse gases to avoid going off the cliff is simply
not knowable for certain, but every minute saved and improvement
made, betters our odds. Let the race begin."